Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/190223 
Year of Publication: 
2018
Series/Report no.: 
ADBI Working Paper No. 802
Publisher: 
Asian Development Bank Institute (ADBI), Tokyo
Abstract: 
Using the 2011 China Household Finance Survey (CHFS) database, we explore the heterogeneous impacts of social networks on informal financial inclusion for urban and rural households in the PRC. We find that social networks significantly increase the probability of households' participation in the informal financial market, augment the size of informal financial transactions, and raise the ratio of informal lending to total household assets. We also identify the mechanisms through which social networks affect households' participation in the informal financial market. By reducing the information cost, perceived risk, and precautionary saving, social networks play a larger role for urban households than for rural households. Notably, the effects of social networks on informal finance are strengthened by the development of the formal financial market.
Subjects: 
social networks
informal financial inclusion
perceived risk
precautionary saving
formal financial market
JEL: 
D1
G2
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Working Paper

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